The Sakai bet: the world’s first Gen-10 LCD plant (2007)

Where do you stop the bet?

The heart of this decision was to pile a further bet, at the summit, onto the winning pattern proven at Kameyama. The vision of enclosing liquid crystal as a device Sharp alone possessed and, in the world’s largest factory, aiming even at outside sales was — if one simply extended the experience of success — a coherent expansion. Amid the momentum of the year ended March 2008, which recorded the highest sales in the company’s history, President Katayama’s move to commit some $3.7B (¥430bn) and advance to the world’s first Generation 10 was an aggressive decision taken when management looked at its strongest. The danger lay in resting that premise on being able to go on leading the market with its own technology and scale.

A world-largest factory premised on outside sales turns only when the maker can control demand and price for itself. The stall in large televisions brought by the Lehman shock, and the charge of the Korean and Taiwanese makers, knocked that premise out on both counts. Liquid-crystal panels turned into a component that could not escape price competition however tightly the technology was enclosed, and scale converted directly into the weight of fixed costs. The Sakai investment, in which raising the bet on a winning pattern became the trigger of a management crisis, shows how brittle a decision to chase scale as an extension of success can prove against a change in the environment. Where do you stop the bet — that question Sharp’s concentration on liquid crystal leaves open even now.